The following table is taken from the 2003 financial statements of McDonald's and Wendy's!
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McDonald's
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Wendy's
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Inventory
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$ 129.4
|
$54.5
|
|
Revenue
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17,140.5
|
3,148.9
|
|
Cost of goods sold
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11,943.7
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1,634.6
|
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Gross profit
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5,179.8
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1,514.4
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a. In 2003, what were McDonald's inventory turns? What were Wendy's inventory turns?
b. Suppose it costs both McDonald's and Wendy's $3 (COGS) per their value meal offerings, each sold at the same price of $4. ASSW11e that the cost of inventory for both companies is 30 percent a year. Approximately how much does McDonald's save in inventory cost per value meal compared to that of Wendy's? You may assume the inventory turns are independent of the price.